The economy in the USA expanded at the weakest pace in the past three years during the first three months of 2017 as spending by consumers was almost flat and investments in inventories by businesses were down, in a possible setback to the promise by President Donald Trump to boost economic growth.
According to the Commerce Department, U.S. Gross Domestic Product grew at a 0.7% annual rate in the first quarter from the preceding three months.
Trump repeatedly attacked the weak GDP rates during the campaign as an example of the Obama administration’s failed economic policies. President Trump made a pledge to raise growth to 4%.
The White House has been promising a return to three percent economic growth, which it says will generate the revenue needed to pay for multi-trillion-dollar tax cuts unveiled this week.
The UK economy grew by just 0.3% at the start of the year, the slowest growth rate since the first three months of 2016, according to official figures.
The Bureau of Economic Analysis, which prepares the GDP report, has a three-year program aimed at addressing this problem, which has been particularly problematic in the first quarter.
Yet Trump has not shied from taking credit for positive economic news early in his administration. The previous jobs reports over the past year usually saw greater job growth closer to 200,000. Luschini said that’s evidence that as inflation has crept higher, consumers have continued to become more disciplined, which has consequently negated some of the benefits of recent wage increases.
Spending on nonresidential structures accelerated at a 22.1 percent pace in the first quarter after falling at a 1.9 percent rate in the prior period. Because of measurement complications, first-quarter economic growth is often underestimated in government reports. In the winter, Americans spent less on home heating fuel, clothes and gasoline due to unseasonably warm weather in February. Should this happen and business investment remains strong, RBC is forecasting the GDP to clock in at an annual rate of 2.5%. After registering a strong 3.5% gain in Q4, real consumer spending advanced just 0.3% in Q1, the weakest annualized pace of growth since Q4 of 2009. Excluding food and energy prices, the PCE price index increased 2.0 percent, compared with an increase of 1.3 percent. At the beginning of 2000, 67.3 percent of the adult population was working or looking for work. President Ronald Reagan took office in January 1981 and left in January 1989.
Reagan, however, had advantages that Trump will not have.
One factor is the age of the labor force.
“You look at the whole weight of evidence, if anything the evidence is suggesting the trend in growth is accelerating, not decelerating”, said Jim O’Sullivan, chief US economist at High Frequency Economics.
Lee Hopley, chief economist at EEF the manufacturers’ group, that “even with the pace of expansion dropping, we shouldn’t be too hasty in dialling up the despair about the outlook for the United Kingdom economy”.
He later backed off, saying he would instead try first to renegotiate the pact. “That’s something we expect to continue over the next couple of years”, Fed Chair Janet Yellen said. It also failed to meet surging confidence expressed by consumers and businesses since Trump won the election in November. Many Americans are split over whether these policies actually can ever get implemented, and by now we can all agree about how messy politics in Washington, D.C., is at this time. The slowdown was down to stagnant consumer spending, economists said. “What are we talking about?” “That’s really awful”, he said.